If you’re thinking about buying a dental practice, building one from scratch, or purchasing real estate for your office, there’s a good chance you’ll come across SBA loans.
And if you’re not already familiar, now’s the time to get up to speed because when structured right, they can be one of the most flexible financing tools available to dentists.
But here’s the catch. SBA loans for dental practices aren’t something you want to figure out at the last minute. Like most things in business, the better prepared you are ahead of time, the smoother the process and the better the result.
Let’s break it all down.
What Is an SBA Loan?
SBA loans are small business loans that are backed by the U.S. government.
That backing gives lenders the confidence to offer more favorable terms. Things like lower down payments, longer repayment periods, and better flexibility if you hit a slow patch in your business.
There are two main types that come up in dentistry:
SBA 7(a) loan
This is the most common option. It can be used for buying a practice, working capital, equipment, renovations, or even refinancing.
SBA 504 loan
This is designed specifically for buying commercial real estate. These loans are great if you’re purchasing the building your practice operates in, especially if you’re trying to lock in a fixed rate and a 25 year term.
Both options can work well depending on your goals, but they serve very different purposes.
Why SBA Loans Work So Well for Dentists
Lenders love working with dentists. You’re seen as a lower-risk borrower, and banks know that dental practices tend to be steady, profitable businesses once they’re up and running.
SBA loans are especially useful if you’re:
- Starting a brand new practice and don’t have an existing business to show cash flow
- Buying a smaller or underperforming office that wouldn’t qualify for conventional lending
- Purchasing real estate and want a longer repayment window to keep your cash flow flexible
The extra breathing room these loans offer in the first few years can be a game changer. You get time to stabilize the business, get your marketing dialed in, build up cash flow, and then reassess.
How to Set Yourself Up for Approval
If you’re considering an SBA loan, even if it’s a year or two away, here’s what you can do now to put yourself in a strong position.
Be bankable
That word gets thrown around a lot, but what it really means is this. If a lender looked at your financial picture tomorrow, would they want to lend to you? That includes having a solid credit score above 700, not being weighed down by debt, and showing a strong income from associate work.
Keep expenses lean
Try not to buy the million-dollar house or the high-end car lease right before applying. If you’re paying between five thousand and sixty-five hundred a month in personal obligations like mortgage, student loans, car, and credit cards, you’re likely still in a good range. Beyond that, things start to get tighter.
Build cash
For a startup, most banks want to see at least forty to fifty thousand in your account. For an acquisition, expect to put down around 7-10% of the purchase price. Even if the loan is fully financed, you’ll still need working capital.
Know your numbers
If you’re applying to buy a practice, the bank’s going to ask whether you can replace the existing doctor’s production. So if that practice is collecting one point two million, but you’ve only been producing five hundred thousand, they’ll ask how you’re planning to close that gap. Make sure you’re getting production reports from your associate position now, so you’re not scrambling later.
Start early
Don’t wait until you’ve signed a letter of intent or found the perfect location. Talk to your bank, your CPA, and your attorney early. That’s what makes you ready when the right opportunity comes up.
One quick note if you’re applying now.
As of June 2025, the SBA tightened its rules.
Credit score requirements increased, seller financing counts less toward your down payment, and lenders are now required to follow stricter underwriting standards. You’ll also need to show hazard insurance on loans over fifty thousand, and every owner or partner must be a U.S. citizen or permanent resident. These changes mean more paperwork and a bit more scrutiny, so make sure your financials and timeline account for that before you apply.
When SBA Loans Make the Most Sense
Here’s where we see SBA loans shine.
For startups
These are projection-based loans, meaning the bank is lending based on what the practice is expected to do, not what it’s already doing. SBA terms give you room to breathe while you ramp up production.
For underperforming or turnaround practices
If you’re buying a smaller office or one where the previous doctor slowed down production, SBA loans can be a great fit. They give you longer repayment terms, which softens the blow on your cash flow.
For real estate purchases
SBA 504 loans let you buy your building with as little as 10% down. That’s a big difference compared to a conventional 20 or 25% requirement, especially if property values are high.
How SBA Loans Work in Real Life
Let’s say you’re buying a practice and the building it operates in.
You might get a conventional loan for the practice purchase, and an SBA 504 loan for the real estate. That 504 loan would likely be broken into two parts:
- One part comes from the bank, subject to rate resets
- Another portion comes from the SBA-backed side, fixed for 25 years
- The final portion is your 10% down
This structure lets you buy both the business and the property while keeping your monthly payments manageable. The fixed rate portion also protects part of your loan from future interest rate hikes.
Just keep in mind, the building must be at least 51% owner-occupied. That means you can rent out some space, but most of it needs to be used for your own practice.
Know What You’re Signing Up For
SBA loans are great, but they do come with more paperwork, a longer application process, and more time to close.
For example,
- An acquisition loan might take 45 to 60 days to close
- A startup loan could take longer depending on lease negotiations and construction timelines
- You’ll need to provide a full financial package including business plan, tax returns, personal financial statement, and production history
You also need to be ready to answer questions about cash flow, especially if you’re buying an underperforming office or jumping into a startup with no revenue.
Bottom Line
SBA loans are a powerful tool for dentists. But like everything in business, they work best when you’re proactive, not reactive.
If your goal is to start a practice in six months, you should be planning now. If you’re thinking about buying a building next year, it’s time to start getting your finances in shape and talking to lenders.
There’s a lot to consider, and the process can feel overwhelming, but you don’t have to figure it out alone. We help dentists with this every day.
Whether you’re planning a startup or looking at an acquisition, we’ll help you understand what the bank wants to see, get your financials lined up, and map out a strategy that keeps your options open.
Get in touch with us by booking a quick introductory call here.
You don’t need to be perfect. But you do need to be bankable.
We’ll help you get there.
Until next time!
